Form 8038-G: Information Return for Government Purpose Tax-Exempt Bond Issues

Form 8038-G: Information Return for Government Purpose Tax-Exempt Bond Issues

Form 8038-G is an essential document for issuers of government purpose tax-exempt bonds. It serves as an information return to report key details about the issuance of tax-exempt bonds that are used for governmental purposes, such as infrastructure projects or public facilities.

By filing Form 8038-G, issuers are able to comply with IRS regulations and report important information about the bond issuance. This guide will break down the filing process, key information required, and the importance of submitting Form 8038-G on time.

What is Form 8038-G?

Form 8038-G is used by issuers of government purpose tax-exempt bonds to report details to the IRS regarding the issuance of these bonds. Tax-exempt bonds are issued by state or local governments for projects that serve public purposes, such as building roads, schools, or public utilities.

The form provides the IRS with the necessary information to verify that the bonds meet the qualifications for tax-exempt status under Section 103 of the Internal Revenue Code (IRC). Form 8038-G is required to ensure that the bond issuance complies with all rules governing tax-exempt status and that the bonds are used for valid public purposes.

Who Must File Form 8038-G?

Issuers of government purpose tax-exempt bonds are responsible for filing Form 8038-G. Specifically, this includes:

1. State and Local Governments:

   • Cities, counties, towns, municipalities, and other government entities that issue tax-exempt bonds for governmental purposes.

2. Qualified Tax-Exempt Bonds:

   • Only bonds used for government purposes are reported on Form 8038-G. This typically includes bonds issued for public infrastructure or community projects.

3. Bond Types:

   • The bonds reported on Form 8038-G are governmental bonds, meaning the proceeds from the bonds will be used for public purposes and not for private or business-related activities.

When is Form 8038-G Due?

The due date for Form 8038-G depends on the timing of the bond issuance. It must be filed within 90 days after the bonds are issued. Issuers must ensure that the form is filed on time to avoid penalties.

In practice, issuers generally need to file by the 15th day of the 3rd month after the end of the month in which the bonds were issued.

For example:

• If the bond issue occurs on March 1st, Form 8038-G would be due by June 15th.

Key Information Required on Form 8038-G

To accurately complete Form 8038-G, issuers need to provide a variety of details about the bond issuance. Here’s a breakdown of the key information required:

1. Issuer Information:

   • Name of Issuer: The official name of the state or local government entity that issued the bonds.
   • Employer Identification Number (EIN): The unique identification number assigned to the issuer by the IRS.
   • Issuer’s Address: The physical address of the issuer.
   • Contact Person: The name and contact information of the person responsible for the bond issuance.

2. Bond Issue Information:

   • Issue Date: The date the bonds were issued or sold.
   • Bond Amount: The total principal amount of the bond issue.
   • Bond Type: The type of bonds being issued (governmental bonds).
   • Maturity Date: The date the bonds are set to mature.

3. Bond Purpose:

   • Use of Proceeds: The specific public purpose for which the bond proceeds will be used (e.g., building public schools, roads, or parks).
   • The form asks for detailed information on the governmental purpose of the bonds, to ensure compliance with IRS requirements for tax-exempt bonds.

4. Tax-Exempt Status Certification:

   • Certifying Compliance: The issuer must certify that the bonds comply with the requirements for tax-exempt status under the Internal Revenue Code.
   • This certification assures the IRS that the bonds are issued for qualified governmental purposes and will be used in accordance with tax-exempt rules.

5. Rebate Requirements:

   • The form also requires information related to rebate compliance. This involves ensuring that the issuer complies with regulations about the rebate of arbitrage profits (profits made from investing bond proceeds in higher-yielding investments). If applicable, the issuer may need to report whether a rebate is due.

6. Miscellaneous Information:

   • Description of the Bonds: Any additional details or unique characteristics of the bonds being issued.
   • Public Approval: Confirmation that the issuance of the bonds complies with any required public approval procedures, such as votes or hearings.

Filing and Submission Process

1. Prepare the Information:

   • Before completing Form 8038-G, issuers should gather all relevant details about the bond issuance, including the amount of the bond issue, the issue date, and the intended use of the bond proceeds.

2. Complete the Form:

   • Carefully fill out Form 8038-G, ensuring that all required fields are completed. Accurate reporting is critical to ensure compliance with IRS regulations.

3. Submit to the IRS:

   • The completed form must be submitted to the IRS by mail. The address for submission is provided in the instructions for Form 8038-G.
   • Electronic filing of this form is not available.

4. Keep Records:

   • Issuers should retain a copy of Form 8038-G and all supporting documentation for their records. The IRS may request this information in future audits or compliance checks.

Penalties for Non-Filing or Late Filing

Issuers who fail to file Form 8038-G on time or fail to provide accurate information may face several penalties:

1. Late Filing Penalties:

   • The IRS imposes a penalty of $25 per day for each day the form is late, up to a maximum of $1,000 for each bond issue.

2. Failure to Comply with Tax-Exempt Status:

   • Failure to submit the required information may lead to the loss of the tax-exempt status of the bonds, meaning the bondholders could be required to pay taxes on the interest income they earn from the bonds.

3. Increased IRS Scrutiny:

   • Issuers who fail to file accurately or on time may face additional IRS audits or requests for further information, leading to additional administrative burdens.

Conclusion

Form 8038-G is an important form for issuers of government purpose tax-exempt bonds. It ensures that the IRS has the necessary information to verify that the bonds comply with the tax-exempt status rules under the Internal Revenue Code. By filing this form on time and with accurate details, issuers can avoid penalties, maintain the tax-exempt status of their bonds, and ensure compliance with IRS requirements.